Second quarter brings record truck rates, USDA reports

Both truck rates and shipment volumes set new records in the second quarter of 2018, according to a new report from the U.S. Department of Agriculture.

The Agricultural Refrigerated Truck Quarterly, released in late October, reviewed truck rate conditions from April through June this year and provided an outlook for refrigerated trucks through the end of the year.

“Indicators point to sustained high rates and tight capacity for the trucking industry, including the refrigerated truck market, through the end of 2018 and possibly beyond,” the report said.

In addition, the report said Hurricane Florence may have effects on the truck market in the months ahead, adding pressure to an already tight market.

“With demand for truck services projected to remain high, these combined factors could keep truck capacity scarce and rates high for the foreseeable future,” the report said.

Hauling the freight

The USDA said trucks are the dominant carriers of freight, carrying 70.2% of domestic freight in 2017, according to the American Trucking Associations. Strong economic growth kept truckers busy inn the first half of the year, the USDA said, as real gross domestic product increased 4.2% in the second quarter of 2018.

While the economy was heating up, unemployment reached a 10-year low of 3.8% in May.

Through the first half of 2018, ATA reported the freight tonnage hauled by trucks increased 7.9%,up from a 3.8% increase in 2017.

The report said DAT Solutions reported strong demand for trucking services caused truckload spot rates to reach a record high in June, topping a 15-month run of spot market rate increases. In the refrigerated truck market, DAT reported the national average spot market rate hit the highest point ever recorded, at $2.69 per mile in June, up $0.58 from June 2017, and $0.11 higher than the contract rate. While increases in contract rates typically lag four to six months, after a sustained increase in spot market rates, this year the lag has been only a few weeks.

Refrigerated truck market

Strong demand for truck services and large volumes has mostly impacted truck rates for shipments traveling between 500 and 2,500 miles, according to the USDA. The U.S. average refrigerated truck rate reached a record high in the second quarter, for shipments between 501 and 1,500 miles ($2.96 per mile), up 12% from the previous quarter ($2.64 per mile).

The U.S. average truck rate for shipments between 1,501 and 2,500 miles was still higher than usual at $2.45 per mile, but was 3% lower than the record high of $2.54 per mile, set in the first quarter of 2018. In contrast, average truck rates for shipments less than 500 miles, and over 2,500 miles, have remained within normal ranges.

Fruit and vegetable shipments

Reported U.S. truck shipments of fresh produce during the second quarter of 2018 were a record 9.65 million tons, 21% higher than the previous quarter, and 1% higher than the same quarter last year.

Shipments from Mexico were the highest in the second quarter, totaling 2.85 million tons and accounting for 30% of the total reported shipments of fresh fruits and vegetables. Shipments from California totaled 2.24 million tons, accounting for 23% of the reported shipments. Movements from the Pacific Northwest totaled 1.55 million tons, representing 16% of the reported total.

The report said that until ten years ago, California and Florida were the two biggest suppliers of fresh fruit and vegetables, during the second quarter. In recent years, both states have lost market share to the Pacific Northwest and Mexico, the USDA said.

The volume of shipments from Mexico through Texas reached a new high of 1.30 million tons during the second quarter of 2018, an increase of 8% over the same period last year (1.21 million tons).
Five commodities accounted for 42% of the reported truck movements during the second quarter of 2018: